In making investment decisions, you are gaizing into a crystal ball and making choices. If you choose correctly, you will do well; if incorrectly, not as well. So its a balance of risk, and reward, but no one clearly knows the future.If in doubt go with an S&P index fund. They have done well in recent years and are more consistent than many managed funds. Especially in the $ amounts you have in mind, mutual fund is probably best. A growth stock like Microsoft could do very well, but there is risk there. A mutual fund tends to spread the risk. The one you describe is probably higher risk and higher return than an index fund would be.Some of the Alliance funds have performed very well, but most are load funds, and changes can be steep. A no load fund would probably be more cost effective.A combination of an index fund and a growth fund would be somewhat more conservative with excellent growth prospects.At your age, if you hit the right combination and do well you will be richly rewarded with the effects of compounding. You seem to be on the right track.Best of luck to you.